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Waiting for Foot Locker's Earnings? Here's a Trade to Consider First


Analysts project Foot Locker Q2 EPS to see a 14% increase from last quarter, and revenue is expected to break a company record.

MINYANVILLE ORIGINAL After a strong growth quarter, Foot Locker (FL) is set to report earnings tomorrow before the markets open. Following its earnings of $0.24 in Q1, analysts project Foot Locker's Q2 EPS at $0.33, a 14% increase from the last quarter. Additionally, revenue is expected to break a company record at $1.35 billion, compared to $1.27 billion in the first quarter. Finally, Foot Locker recently announced that it expects full year earnings of $2.39 with a quarterly dividend of $0.18.

While Foot Locker is unable to compete with giants like Nike (NKE) and Adidas (ADDYY), it has a significant advantage in its industry with its closest true competitor, Finish Line (FINL). Despite cutting stores and square footage by 3%, same-store sales finished up 9% in the first quarter of 2012. Clearly, Foot Locker has been trimming its worst-performing stores and should exit the closings leaner and more profitable. Finally, in the first quarter, both divisions of Foot Locker, the brick-and-mortar stores and the online division, increased their sales revenue with brick-and-mortar sales as an overwhelming majority.

20 Day: 33.63 50 Day: 31.87 200 Day: 28.29

Trade: Selling the August 34 -33 put spread
Sselling the 34 puts; buying the 33 puts for protection.
Risk: $70 per 1 lot
Reward: $30 per 1 lot
Breakeven: $33.70
Strategy: Bullish to neutral

I make money if stock goes up, flat, or down less than 3%.

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